Management Liability Insurance: Are you covered?

Over the last couple of years, we’ve noticed legal proceedings concerning negligence and / or breaches of legislation occurring more frequently. As a business owner, you’re exposed to significant legal defence costs and fines. Even if you’ve done nothing wrong, you can still be required to pay legal expenses to defend yourself if a disgruntled employee brings a case against you. 

Management liability insurance is designed to protect companies from the expenditure involved in defending their business and payouts / fines that may be awarded.   

Management Liability covers a broad range of areas. Key sections include issues pertaining to OH&S, Employment Practices, Employee Crime, and Statutory Liability. To help you develop a better understanding of this insurance, one of our insurance partners have provided a few real claims examples below.

If you would like to discuss Management Liability insurance in more detail, please give us a call.

Claims Example: OH&S & Statutory Liability 

An apprentice chef from the insured hotel restaurant was busy preparing for the dinner service. Unfortunately, he suffered severe injury when he sliced his hand on the hand slicer. A full Occupational Health and Safety investigation began which eventually led to the company being prosecuted. The prosecution alleged that the company failed to provide adequate training and supervision to the apprentice.

Outcome

It was determined that the Policy was triggered and indemnity was extended to the Insured. The company vigorously denied and successfully defended all allegations. Despite their attempt at defending the claim, the company was fined $25,000 and incurred close to $20,000 in legal defence costs.

 

Claims Example: Employee Theft 

Over a period of 2 years, an employee of the Insured construction company in collusion with his wife and son were stealing building supplies to build homes for other clients. The employee and his wife had a marriage break up which resulted in her coming clean to the police. The employee was arrested and charged with the theft of $550,000 worth of building supplies.

Outcome

The Insured made a fidelity claim on their policy and it was determined that the Policy was triggered and indemnity was extended to the Insured. The Insured was able to prove their loss and make a claim for the amount of $680,000 following the report of the loss assessor who assisted the Insured to quantify their loss.

 

Claims Example: Employment Practices 

A business and development manager in a National office was terminated by the Insured on the basis that his position was made redundant. The ex employee issued proceedings in the Human Rights Commission alleging that he was wrongfully terminated on the basis that someone else was promoted into his position and that his former role was not redundant.

Outcome

The ex employee was able to prove his case and accordingly, the Commission determined that there was wrongful termination and ordered the employer to reinstate the employee and pay him $50,000 in damages and costs.

 

Claims Example: Harassment & Bullying Background

A claim was made by four former drilling contractors against certain directors, managers and supervisors for bullying, harassment, abuse and sexual harassment. Claims were made against the entity alleging that it failed to respond to those allegations. Employees claim combined compensation of $500,000.

Outcome

After protracted litigation, the matter settled for payment by the company of $80,000 per claimant. In addition to this, the company incurred over $150,000 in defence costs.

 

Claims Example: OH & Safety 

A mining engineer and geotechnical specialist, contracted by the insured mining company were inspecting a tunnel for the purposes of deciding how to support the excavations and what type of equipment would be best suited to cutting and drilling the rock mass. During the inspection, they were severely injured when part of the tunnel collapsed on them. The mining contractor was left paraplegic and the geotechnical was left with deep lacerations on his right thigh along with a punctured lung and head trauma. The insured company was subject to a full Occupational Health and Safety investigation and prosecution.

Outcome

The company vigorously denied and successfully defended all allegations. Despite their attempt, the company was fined $450,000 and incurred close to $100,000 in legal defence costs.